Legal Question in Bankruptcy in California

Filing bankruptcy to avoid judgment

I am suing a bad remodeling contractor and I am very likely to prevail. We are going to get a judgment either via trial or via summary judgment. He doesn't have alot of assets, just some bare land he owns free and clear--a couple of parcels. If I get the judgment and lien his land, can he file bankruptcy and get the lien removed? The land is not occupied with no structures on it, likely to be called a non-exempt asset. I am also likely to get his surety bond and reimbursed for my attorney fees. He is retired and on social security and is going to try and make himself judgment proof. Can we make the lien stick regarless of whether he tries to file bankrupcty? Can he file for bankruptcy just to get out of a judgment when I am the major or only judgment creditor? Can we attach the land before trial? Can bankrupcty wipe out the liens? Can we force the sale of the land to satisfy my judgment even if he goes to bankruptcy court?


Asked on 12/07/06, 11:09 pm

1 Answer from Attorneys
Carl Starrett Law Offices of Carl H. Starrett II

Re: Filing bankruptcy to avoid judgment

Your situation is very tricky and the timing of the bankruptcy and the progress of your lawsuit are key issues. I cannot address all of the issues in the space permitted, but I will cover some of the major points. I am also assuming the contractor is an individual and not a corporation.

If the contractor files for BK, the automatic stay prohibits the lawsuit from moving forward. You could end up being an unsecured creditor just like everybody else if the contractor received a discharge.

A discharge would void any judgment, but would not automically void a judgment LIEN created by the filing of an abstract of judgment. The debtor could have the judgment lien stripped only to the extent that the lien interfered with the statutory exemption and vacant land would not be exempt, unless it could be called a homestead (i.e. the debtor had a mobilehome on the land.

You could seek a prejudgment attachment on the property, but your proof on the motion must be fairly convincing. Also, an attachment lien and a judgment lien are both "transfers" under the bankrutpcy code. Any "transfer" of the debtor's assets within 90 days prior to the bankruptcy would be a deemed a preferential transfer and could also be set aside.

Any aggressive action you take could prompt a BK...or it might not. Any action you take is a calculated risk. Feel free to contact me office if you need more information.

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Answered on 12/08/06, 12:50 pm


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